EXHIBIT 10.10
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of November 7,
2000, is by and between DELTA APPAREL, INC., a Georgia corporation (the
"Company"), and HERBERT M. MUELLER, a Georgia resident ("Executive").
WHEREAS, Executive and the Company want to enter into a written
agreement providing for the terms of Executive's employment by the Company.
NOW, THEREFORE, in consideration of the foregoing recital and of the
mutual covenants set forth herein, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
1. Employment. Executive agrees to continue his employment by the
Company, and the Company agrees to employ Executive, on the terms and conditions
set forth in this Agreement. Executive agrees during the term of this Agreement
to devote substantially all of his business time, efforts, skills and abilities
to the performance of his duties as stated in this Agreement and to the
furtherance of the Company's business.
Executive's initial job title will be Vice President, Chief
Financial Officer and Company Treasurer and his duties will be those as are
designated by the Chief Executive Officer of the Company. Executive further
agrees to serve, without additional compensation, as an officer or director, or
both, of any subsidiary, division or affiliate of the Company or any other
entity in which the Company holds an equity interest, provided, however, that
(a) the Company shall indemnify Executive from liabilities in connection with
serving in any such position to the same extent as his indemnification rights
pursuant to the Company's Articles of Incorporation, By-laws and applicable
Georgia law, and (b) such other position shall not materially detract from the
responsibilities of Executive pursuant to this Section 1 or his ability to
perform such responsibilities.
2. Compensation.
(a) Base Salary. During the term of Executive's employment
with the Company pursuant to this Agreement, the Company shall pay to Executive
as compensation for his services an annual base salary of not less than
$160,000.00 ("Base Salary"). Executive's Base Salary will be payable in arrears
in accordance with the Company's normal payroll procedures and will be reviewed
annually and subject to upward adjustment at the discretion of the Compensation
Committee of the Company's Board of Directors.
(b) Incentive Bonus. During the term of Executive's employment
with the Company pursuant to this Agreement, Executive shall be entitled to
participate in the Company's Short Term Incentive Compensation Plan.
(c) Executive Perquisites. During the term of Executive's
employment with the Company pursuant to this Agreement, Executive shall be
entitled to receive such executive perquisites and fringe benefits as are
provided to the executives in comparable positions and their families under any
of the Company's plans and/or programs in effect from time to time and such
other benefits as are customarily available to executives of the Company and
their families, including without limitation vacations and life, medical and
disability insurance.
(d) Tax Withholding. The Company has the right to deduct from
any compensation payable to Executive under this Agreement social security
(FICA) taxes and all federal, state, municipal or other such taxes or charges as
may now be in effect or that may hereafter be enacted or required.
(e) Expense Reimbursements. The Company shall pay or reimburse
Executive for all reasonable business expenses incurred or paid by Executive in
the course of performing his duties hereunder, including but not limited to
reasonable travel expenses for Executive. As a condition to such payment or
reimbursement, however,
Executive shall maintain and provide to the Company reasonable documentation and
receipts for such expenses.
3. Term. Unless sooner terminated pursuant to Section 4 of this
Agreement, and subject to the provisions of Section 5 hereof, the term of this
Agreement (the "Term") shall commence as of the date hereof and shall continue
until December 31, 2003.
4. Termination. Notwithstanding the provisions of Section 3 hereof, but
subject to the provisions of Section 5 hereof, Executive's employment under this
Agreement shall terminate as follows:
(a) Death. Executive's employment shall terminate upon the
death of Executive; provided, however, that the Company shall continue to pay
(in accordance with its normal payroll procedures) the Base Salary to
Executive's estate for a period of six months after the date of Executive's
death.
(b) Termination for Cause. The Company may terminate
Executive's employment at any time for "Cause" (as hereinafter defined) by
delivering a written termination notice to Executive. For purposes of this
Agreement, "Cause" shall mean any of: (i) Executive's conviction of a felony or
a crime involving moral turpitude; (ii) Executive's commission of an act
constituting fraud, deceit or material misrepresentation with respect to the
Company; (iii) Executive's embezzlement of funds or assets from the Company;
(iv) evidence sufficient to conclude that Executive is addicted to any
alcoholic, controlled or illegal substance or drug; (v) Executive's commission
of any act or omission of gross negligence or willful misconduct which would
give the Company the right to terminate Executive's employment under applicable
law; or (vi) Executive's failure to correct or cure any material breach of or
default under this Agreement within ten days after receiving written notice of
such breach or default from the Company.
(c) Termination Without Cause. The Company may terminate
Executive's employment at any time for any or no reason by delivering a written
termination notice to Executive.
(d) Termination by Executive. Executive may terminate his
employment at any time by delivering sixty days prior written notice to the
Company; provided, however, that the terms, conditions and benefits specified in
Section 5 hereof shall apply or be payable to Executive only if such termination
occurs as a result of a material breach by the Company of any provision of this
Agreement.
(e) Termination Following Disability. In the event Executive
becomes "disabled" (as defined in the Company's disability insurance policy) and
is unable to perform his material duties and responsibilities hereunder for a
period of at least ninety days in the aggregate during any one hundred twenty
consecutive day period, the Company may terminate Executive's employment by
delivering a written termination notice to Executive. Notwithstanding the
foregoing, Executive shall continue to receive his full Base Salary and benefits
under this Agreement for a period of six months after the effective date of such
termination.
(f) Payments. Following any expiration or termination of this
Agreement or Executive's employment hereunder, and in addition to any amounts
owed pursuant to Section 5 hereof, the Company shall pay to Executive all
amounts earned by Executive hereunder prior to the date of such expiration or
termination.
5. Certain Termination Benefits. Subject to Section 6(a) hereof, in the
event (i) the Company terminates Executive's employment without cause pursuant
to Section 4(c) or (ii) Executive terminates his employment pursuant to Section
4(d) as a result of a material breach by the Company of any provision of this
Agreement:
(a) Base Salary and Incentive Compensation. The Company shall
continue to pay to Executive his Base Salary (as in effect as of the date of
such termination) and Incentive Compensation (equal to the Incentive
Compensation received for the most recent year) that would have been payable
hereunder to Executive from the date of such termination for a period of twelve
months following the termination.
(b) Life Insurance. The Company shall continue to provide
Executive with group and additional life insurance coverage for a period of
twelve months following termination at coverage levels equal to those applicable
to
Executive immediately prior to such termination or as provided to other
executive level employees during such twelve month period.
(c) Medical Insurance. The Company shall continue to provide
Executive and his family with group medical insurance coverage under the
Company's Medical Plans (as the same may change from time to time) or other
substantially similar health insurance for a period of twelve months following
termination at coverage levels equal to those applicable to Executive
immediately prior to such termination or as provided to other executive level
employees during such twelve month period or pay COBRA premiums during such
twelve month period.
(d) Group Disability. The Company shall continue to provide
Executive coverage under the Company's group disability plan, if any, for a
period of twelve months following termination at coverage levels equal to those
applicable to Executive immediately prior to such termination or as provided to
other executive level employees during such twelve month period.
(e) Offset. Any fringe benefits received by Executive in
connection with any other employment accepted by Executive that are reasonably
comparable, even if not necessarily as beneficial, to Executive as the fringe
benefits then being provided by the Company pursuant to paragraphs (c), (d) and
(e) of this Section 5, shall be deemed to be the equivalent of, and shall
terminate the Company's responsibility to continue providing, the fringe
benefits package, taken as a whole, then being provided by the Company pursuant
to paragraphs (c), (d) and (e) of this Section 5. The Company agrees that if
Executive's employment with the Company is terminated, Executive shall have no
duty to mitigate damages.
(f) Payment Default. Any amounts owed by Company to Executive
under this Section 5 that are not paid when due shall bear interest at a rate of
10% per annum.
(g) General Release. Acceptance by Executive of any amounts
pursuant to this Section 5 shall constitute a full and complete release by
Executive of any and all claims Executive may have against the Company, its
officers, directors and affiliates, including, but not limited to, claims he
might have relating to Executive's cessation of employment with the Company;
provided, however, that there may properly be excluded from the scope of such
general release the following:
(i) claims that Executive may have against the
Company for reimbursement of ordinary and necessary business
expenses incurred by him during the course of his employment;
(ii) claims that may be made by the Executive for
payment of Base Salary, bonuses, fringe benefits, stock upon
vesting of inactive stock awards, stock upon exercise of stock
options properly due to him, or other amounts or benefits due
to him under this Agreement;
(iii) claims respecting matters for which the
Executive is entitled to be indemnified under the Company's
Certificate of Incorporation or Bylaws, respecting third party
claims asserted or third party litigation pending or
threatened against the Executive; or
(iv) claims Executive may have against the Company
for violation of employment laws, including, without
limitation, laws prohibiting discrimination against employees.
A condition to Executive's receipt of any amounts pursuant to this Section 5
shall be Executive's execution and delivery of a general release as described
above. In exchange for such release, the Company shall, if Executive's
employment is terminated without Cause, provide a release to Executive, but only
with respect to claims against Executive which are actually known to the Company
as of the time of such termination.
6. Effect of Change in Control.
(a) If within one year following a "Change of Control" (as
hereinafter defined), Executive
terminates his employment with the Company for Good Reason (as hereinafter
defined) or the Company terminates Executive's employment for any reason other
than Cause, death or disability, the Company shall pay to Executive: (1) an
amount equal to one times the Executive's Base Salary as of the date of
termination; (2) an amount equal to one times the average annual cash bonus paid
to Executive for the one fiscal year immediately preceding the date of
termination; (3) all benefits under the Company's various welfare and benefit
plans, including retirement, group healthcare, dental and life, for the period
equal to twelve months from the date of termination; and (4) outplacement
assistance.
(b) "Change of Control" shall mean the date as of which: (i)
there shall be consummated (1) any consolidation or merger of the Company other
than a merger of the Company in which the holders of the Company's common stock
immediately prior to the merger have the majority ownership of common stock of
the surviving corporation immediately after the merger, or (2) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company; or
(ii) the stockholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company; or (iii) any person ( as such term is
used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of 30% of the Company's
outstanding common stock; or (iv) during any period of two consecutive years,
individuals who at the beginning of such period constitute the entire board of
directors of the Company shall cease for any reason to constitute a majority
thereof unless the election, or the nomination for election by the Company's
stockholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period.
(c) "Good Reason" shall mean any of the following actions
taken by the Company without the Executive's written consent after a Change of
Control :
(i) the assignment to the Executive by the Company of
duties inconsistent with, or the reduction of the powers and
functions associated with, the Executive's position, duties,
responsibilities and status with the Company immediately prior
to a Change of Control or Potential Change of Control (as
defined below), or an adverse change in Executive's titles or
offices as in effect immediately prior to a Change of Control
or Potential Change of Control, or any removal of the
Executive from or any failure to re-elect Executive to any of
such positions, except in connection with the termination of
his employment for disability or Cause or as a result of
Executive's death except to the extent that a change in duties
relates to the elimination of responsibilities attendant to
the Company's no longer being a publicly traded company;
(ii) A reduction by the Company in the Executive's
Base Salary as in effect on the date of a Change of Control or
Potential Change of Control, or as the same may be increased
from time to time during the term of his Agreement;
(iii) The Company shall require the Executive to be
based anywhere other than at or within a 25 mile radius of the
Company's principal executive offices or the location where
the Executive is based on the date of a Change of Control or
Potential Change of Control, or if Executive agrees to such
relocation, the Company fails to reimburse the Executive for
moving and all other expenses reasonably incurred in
connection with such move;
(iv) A significant increase in Executive's required
travel on behalf of the Company;
(v) The Company shall fail to continue in effect any
Company-sponsored plan or benefit that is in effect on the
date of a Change of Control or Potential Change of Control
(other than the Incentive Stock Award Plan or the Company's
stock option plan), that provides (A) incentive or bonus
compensation, (B) fringe benefits such as vacation, medical
benefits, life insurance and accident insurance, (C)
reimbursement for reasonable expenses incurred by the
Executive in connection with the performance of duties with
the Company, or (D) retirement benefits such as a Code Section
401(k) plan,
except to the extent that such plans taken as a whole are
replaced with substantially comparable plans;
(vi) Any material breach by the Company of any
provision of this Agreement which is not cured within 10 days
of Company's receipt from Executive of notice thereof; and
(vii) Any failure by the Company to obtain the
assumption of this Agreement by any successor or assign of the
Company effected in accordance with the provisions of Section
12.
(d) "Potential Change of Control" shall mean the date as of
which (1) the Company enters into an agreement the consummation of which, or the
approval by shareholders of which, would constitute a Change of Control; (ii)
proxies for the election of Directors of the Company are solicited by anyone
other than the Company; (iii) any person (including, but not limited to, any
individual, partnership, joint venture, corporation, association or trust)
publicly announces an intention to take or to consider taking actions which, if
consummated, would constitute a Change of Control; or (iv) any other event
occurs which is deemed to be a Potential Change of Control by the Board and the
Board adopts a resolution to the effect that a Potential Change of Control has
occurred.
(e) In the event that (i) Executive would otherwise be
entitled to the compensation and benefits described in Section 6(a) hereof
("Compensation Payments"), and (ii) the Company determines, based upon the
advice of tax counsel selected by the Company's independent auditors and
acceptable to Executive, that, as a result of such Compensation Payments and any
other benefits or payments required to be taken into account under Code Section
280G(b)(2) ("Parachute Payments"), any of such Parachute Payments would be
reportable by the Company as "excess parachute payments", such Compensation
Payments shall be reduced to the extent necessary to cause Executive's Parachute
Payments to equal 2.99 times the "base amount" as defined in Code Section
280G(b)(3) with respect to such Executive. However, such reduction in the
Compensation Payments shall be made only if, in the opinion of such tax counsel,
it would result in a larger Parachute Payment to the Executive than payment of
the unreduced Parachute Payments after deduction in each case of tax imposed on
and payable by the Executive under Section 4999 of the Code ("Excise Tax"). The
value of any non-cash benefits or any deferred payment or benefit for purposes
of this paragraph shall be determined by the Company's independent auditors.
(f) The parties hereto agree that the payments provided under
Section 6(a) above, as the case may be, are reasonable compensation in light of
Executive's services rendered to the Company and that neither party shall
contest the payment of such benefits as constituting an "excess parachute
payment" within the meaning of Section 280G(b)(1) of the Code.
(g) Unless the Company determines that any Parachute Payments
made hereunder must be reported as "excess parachute payments" in accordance
with Section 6(e) above, neither party shall file any return taking the position
that the payment of such benefits constitutes an "excess parachute payment"
within the meaning of Section 280G(b)(1) of the Code.
7. Non-Competition. Executive agrees that during the Term and for a
period of four months from the date of the termination of Executive's employment
with the Company pursuant to Sections 4(b), 4(c), 4(d), 4(e) and 6 herein or for
any other reason that results in the Executive being entitled to the benefits
described in Section 5, he will not, directly or indirectly, compete with the
Company by providing to any company that is in a "Competing Business" services
substantially similar to the services provided by Executive at the time of
termination. Competing Business shall be defined as any business that engages,
in whole or in part, in the manufacturing or marketing of activewear tee shirts
in the United States of America (the "Restrictive Territory"), and Executive's
employment function or affiliation is directly or indirectly in such business of
activewear tee shirt manufacturing or marketing.
8. Nonsolicitation of Employees. For a period of two years after the
later of the expiration of the Term or the termination or cessation of his
employment with the Company for any reason whatsoever, Executive shall not, on
his own behalf or on behalf of any other person, partnership, association,
corporation, or other entity, (a) solicit or in any manner attempt to influence
or induce any employee of the Company or its subsidiaries or affiliates (known
by the Executive to be such) to leave the employment of the Company or its
subsidiaries or affiliates, nor shall he use or
disclose to any person, partnership, association, corporation or other entity
any information obtained while an employee of the Company concerning the names
and addresses of the Company's employees, or (b) solicit, entice or induce any
customer or supplier of the Company (or any actively sought customer or supplier
of the Company) for or on behalf of any Competing Business in the Restricted
Territory.
9. Nondisclosure of Trade Secrets. During the Term, Executive will have
access to and become familiar with various trade secrets and proprietary and
confidential information of the Company, its subsidiaries and affiliates,
including, but not limited to, processes, computer programs, compilations of
information, records, sales procedures, customer requirements, pricing
techniques, customer lists, methods of doing business and other confidential
information (collectively, referred to as "Trade Secrets") which are owned by
the Company, its subsidiaries and/or affiliates and regularly used in the
operation of its business, and as to which the Company, its subsidiaries and/or
affiliates take precautions to prevent dissemination to persons other than
certain directors, officers and employees. Executive acknowledges and agrees
that the Trade Secrets (1) are secret and not known in the industry; (2) give
the Company or its subsidiaries or affiliates an advantage over competitors who
do not know or use the Trade Secrets; (3) are of such value and nature as to
make it reasonable and necessary to protect and preserve the confidentiality and
secrecy of the Trade Secrets; and (4) are valuable, special and unique assets of
the Company or its subsidiaries or affiliates, the disclosure of which could
cause substantial injury and loss of profits and goodwill to the Company or its
subsidiaries or affiliates. Executive may not use in any way or disclose any of
the Trade Secrets, directly or indirectly, either during the Term or at any time
after the expiration of the Term or the termination of Executive's employment
with the Company for any reason whatsoever, except as required in the course of
his employment under this Agreement, if required in connection with a judicial
or administrative proceeding, or if the information becomes public knowledge
other than as a result of an unauthorized disclosure by the Executive. All
files, records, documents, information, data and similar items relating to the
business of the Company, whether prepared by Executive or otherwise coming into
his possession, will remain the exclusive property of the Company and may not be
removed from the premises of the Company under any circumstances without the
prior written consent of the Board (except in the ordinary course of business
during Executive's period of active employment under this Agreement), and in any
event must be promptly delivered to the Company upon termination of Executive's
employment with the Company. Executive agrees that upon his receipt of any
subpoena, process or other request to produce or divulge, directly or
indirectly, any Trade Secrets to any entity, agency, tribunal or person,
Executive shall timely notify and promptly hand deliver a copy of the subpoena,
process or other request to the Board. For this purpose, Executive irrevocably
nominates and appoints the Company (including any attorney retained by the
Company), as his true and lawful attorney-in-fact, to act in Executive's name,
place and stead to perform any act that Executive might perform to defend and
protect against any disclosure of any Trade Secrets. The rights granted to the
Company in this Section 9 are intended to be in addition to and not in
replacement of any protection of trade secrets provided by any statute or
judicially created law.
10. Remedies. In the event that Executive violates any of the
provisions of Sections 7, 8 or 9 hereof (the "Protective Covenants") or fails to
provide the notice required by Section 4(d) hereof, in addition to any other
remedy that may be available at law, in equity or hereunder, the Company shall
be entitled to receive from Executive the profits, if any, received by Executive
upon exercise of any Company granted stock options or incentive stock awards or
upon lapse of the restrictions on any grant of restricted stock to the extent
such options or rights were exercised, or such restrictions lapsed, subsequent
to six months prior to the termination of Executive's employment. In addition,
Executive acknowledges and agrees that any breach of a Protective Covenant by
him will cause irreparable damage to the Company, the exact amount of which will
be difficult to determine, and that the remedies at law for any such breach will
be inadequate. Accordingly, Executive agrees that, in addition to any other
remedy that may be available at law, in equity, or hereunder, the Company shall
be entitled to specific performance and injunctive relief, without posting bond
or other security, to enforce or prevent any violation of any of the Protective
Covenants by him.
11. Severability. The parties hereto intend all provisions of Sections
7, 8, 9 and 10 hereof to be enforced to the fullest extent permitted by law.
Accordingly, should a court of competent jurisdiction determine that the scope
of any provision of Sections 7, 8, 9 or 10 hereof is too broad to be enforced as
written, the parties intend that the court reform the provision to such narrower
scope as it determines to be reasonable and enforceable. In addition, however,
Executive agrees that the nonsolicitation and nondisclosure agreements set forth
above each constitute separate
agreements independently supported by good and adequate consideration shall be
severable from the other provisions of, and shall survive, this Agreement. The
existence of any claim or cause of action of Executive against the Company,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of the covenants of Executive
contained in the nonsolicitation and nondisclosure agreements. If any provision
of this Agreement is held to be illegal, invalid or unenforceable under present
or future laws effective during the term hereof, such provision shall be fully
severable and this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision never constituted a part of this Agreement;
and the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom. Furthermore, in lieu of such illegal,
invalid or unenforceable provision, there shall be added as part of this
Agreement, a provision as similar in its terms to such illegal, invalid or
enforceable provision as may be possible and be legal, valid and enforceable.
12. Miscellaneous.
(a) Notices. Any notices, consents, demands, requests,
approvals and other communications to be given under this Agreement by either
party to the other must be in writing and must be either (i) personally
delivered, (ii) mailed by registered or certified mail, postage prepaid with
return receipt requested, (iii) delivered by overnight express delivery service
or same-day local courier service, or (iv) delivered by telex or facsimile
transmission, to the address set forth below, or to such other address as may be
designated by the parties from time to time in accordance with this Section
12(a):
If to the Company:
Delta Apparel, Inc.
2750 Premiere Parkway
Suite 100
Duluth, Georgia 30047
Attn: Chief Executive Officer
If to Executive:
Mr. Herbert M. Mueller
375 Oxford Meadow Run
Alpharetta, Georgia 30004
Notices delivered personally or by overnight express delivery
service or by local courier service are deemed given as of actual receipt.
Mailed notices are deemed given three business days after mailing. Notices
delivered by telex or facsimile transmission are deemed given upon receipt by
the sender of the answer back (in the case of a telex) or transmission
confirmation (in the case of a facsimile transmission).
(b) Entire Agreement. This Agreement supersedes any and all
other agreements, either oral or written, between the parties with respect to
the subject matter of this Agreement and contains all of the covenants and
agreements between the parties with respect to the subject matter of this
Agreement.
(c) Modification. No change or modification of this Agreement
is valid or binding upon the parties, nor will any waiver, termination or
discharge of any term or condition of this Agreement be so binding, unless
confirmed in writing and signed by the parties to this Agreement.
(d) Governing Law and Venue. The parties acknowledge and agree
that this Agreement and the obligations and undertakings of the parties under
this Agreement will be performable in Georgia. This Agreement is
governed by, and construed in accordance with, the laws of the State of Georgia.
If any action is brought to enforce or interpret this Agreement, venue for the
action will be in Georgia.
(e) Counterparts. This Agreement may be executed in
counterparts, each of which constitutes an original, but all of which
constitutes one document.
(f) Costs. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, each party shall bear its own
costs and expenses; provided, however, that in the event Executive incurs costs
or expenses in connection with successfully enforcing this Agreement following a
Change of Control, then Company shall reimburse Executive for all such costs or
expenses.
(g) Estate. If Executive dies prior to the expiration of the
term of employment or during a period when monies are owing to him, any monies
that may be due him from the Company under this Agreement as of the date of his
death shall be paid to his estate and as when otherwise payable.
(h) Assignment. The rights, duties and benefits to Executive
hereunder are personal to him, and no such right or benefit may be assigned by
him without the prior written consent of the Company.
(i) Binding Effect. This Agreement is binding upon and shall
inure to the benefit of the parties hereto, their respective executors,
administrators, successors, personal representatives, heirs and permitted
assigns.
(j) Waiver of Breach. The waiver by the Company or Executive
of a breach of any provision of this Agreement by Executive or the Company may
not operate or be construed as a waiver of any subsequent breach.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
"Company"
DELTA APPAREL, INC.
By:
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Name:
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Title:
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"Executive"
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Herb Mueller